Verve Therapeutics(US:VERV)2023-05-15 11:33PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) Unaudited Q1 2023 financial statements report a $52.0 million net loss, increased operating expenses, and $1.4 million in collaboration revenue Condensed Consolidated Balance Sheet Data (in thousands USD) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $83,746 | $115,412 | | Marketable securities | $424,941 | $439,396 | | Total current assets | $517,787 | $563,159 | | Total assets | $634,376 | $679,223 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $33,552 | $35,095 | | Total liabilities | $124,900 | $128,291 | | Total stockholders' equity | $509,476 | $550,932 | Condensed Consolidated Statements of Operations (in thousands USD) | Account | Three months ended March 31, 2023 | Three months ended March 31, 2022 | | :--- | :--- | :--- | | Collaboration revenue | $1,404 | $0 | | Research and development | $47,110 | $24,490 | | General and administrative | $12,553 | $7,435 | | Loss from operations | ($58,259) | ($31,925) | | Net loss | ($51,975) | ($30,166) | | Net loss per common share, basic and diluted | ($0.84) | ($0.62) | Condensed Consolidated Statements of Cash Flows (in thousands USD) | Activity | Three months ended March 31, 2023 | Three months ended March 31, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($49,096) | ($33,507) | | Net cash provided by investing activities | $15,392 | $60,092 | | Net cash provided by financing activities | $2,038 | $505 | Notes to Unaudited Condensed Consolidated Financial Statements Notes detail financial position, accounting policies, $508.7 million cash sufficiency, $1.4 million Vertex revenue, and $8.0 million stock-based compensation - The company expects its cash, cash equivalents, and marketable securities of $508.7 million as of March 31, 2023, to be sufficient to fund operations and capital expenditures beyond the next 12 months29 - In July 2022, the company entered into a collaboration agreement with Vertex, receiving a $25 million upfront payment. For Q1 2023, Verve recognized $1.4 million in revenue from this agreement and has $20.0 million in non-current deferred revenue5768 - The company has a success payment liability to Harvard and Broad, valued at $2.1 million as of March 31, 2023. The fair value decreased by $0.7 million during the quarter, which was recorded as other income4345 - Stock-based compensation expense for Q1 2023 was $8.0 million, up from $4.2 million in Q1 2022. As of March 31, 2023, there was $91.5 million of unrecognized expense related to stock options and $18.6 million related to restricted stock units757778 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's focus on gene editing medicines for CVD, with lead candidate VERVE-101 in trials despite a U.S. FDA hold, and a Q1 2023 net loss of $52.0 million - Verve is a clinical-stage company focused on single-course gene editing medicines for CVD, with a pipeline targeting PCSK9 (VERVE-101, VERVE-102) and ANGPTL3 (VERVE-201)8687 - The heart-1 clinical trial for VERVE-101 is ongoing in New Zealand and the United Kingdom, with initial data expected in the second half of 2023. However, the U.S. IND application for this trial was placed on hold by the FDA in October 202299101 Financial and Operational Summary (in millions USD) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net Loss | $52.0 | $30.2 | | R&D Expenses | $47.1 | $24.5 | | G&A Expenses | $12.6 | $7.4 | | Collaboration Revenue | $1.4 | $0 | | Cash, Cash Equivalents & Marketable Securities | $508.7 | N/A | - The company believes its existing cash, cash equivalents, and marketable securities of $508.7 million will fund operating expenses and capital expenditure requirements into the second half of 202595140 Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risk from changes in interest rates affecting its cash, cash equivalents, and marketable securities, which totaled $508.6 million as of March 31, 2023, but expects no material effect from a 10% rate change - The company's primary market risk is interest rate risk on its $508.6 million in cash, cash equivalents, and marketable securities. However, due to the short-term, low-risk profile of these holdings, the impact of interest rate changes is not considered material154 - Verve is not currently exposed to significant foreign currency exchange risk but may be in the future due to contracts with vendors outside the U.S.155 - Inflation is not believed to have had a material effect on the company's business, financial condition, or results of operations during Q1 2023156 Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal control over financial reporting during the quarter - As of March 31, 2023, the Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level158 - No material changes to the company's internal control over financial reporting occurred during the quarter ended March 31, 2023159 PART II. OTHER INFORMATION Legal Proceedings As of the report date, Verve Therapeutics is not a party to any material legal proceedings, though future involvement in litigation is possible - The company is currently not a party to any material legal proceedings161 Risk Factors The company faces extensive risks including financial losses, need for funding, unproven gene editing technology, FDA holds, reliance on third parties, IP litigation, and commercialization challenges Risks related to financial position and need for additional capital The company has a history of significant losses, expects them to continue, and requires substantial additional funding to advance programs, with no guarantee of profitability - The company has a history of significant operating losses, with a net loss of $52.0 million for Q1 2023 and an accumulated deficit of $396.2 million as of March 31, 2023163 - Substantial additional funding is needed. If unable to raise capital, the company may be forced to delay, reduce, or eliminate product development or commercialization efforts171 - The company's limited operating history, having commenced operations in 2018 and only recently initiated its first clinical trial, makes it difficult to evaluate its success and future viability178 Risks related to discovery and development This section highlights the high-risk nature of the company's early-stage clinical development, including the novel and unproven base editing technology and an FDA hold on VERVE-101's IND - The company is in the very early stages of development, having only recently initiated its first clinical trial for VERVE-101. The FDA has placed the IND application for this trial on hold in the United States185188 - Gene editing, particularly base editing, is a novel and unproven technology. There is no guarantee it will lead to safe and effective marketable products191 - Product candidates or their LNP delivery systems could cause serious adverse events, including off-target edits, liver injury, or immune reactions, which could delay or halt development230232233 Risks related to dependence on third parties Verve relies heavily on third parties for manufacturing, clinical trials, and key collaborations, introducing risks of performance failures, delays, and loss of control - The company relies on third-party CMOs for manufacturing and CROs for research and clinical testing, which reduces control over these activities and introduces risks of unsatisfactory performance or delays251 - Manufacturing of biologic products is complex and the company has no manufacturing facilities of its own, making it dependent on third parties who must comply with cGMP regulations256258 - The company has entered into key collaborations (e.g., with Beam, Acuitas, Novartis, Vertex) and may not have full control over the resources dedicated by collaborators, posing risks to development and commercialization263 Risks related to our intellectual property Success depends on obtaining and defending IP in the litigious gene editing field, with risks from patent interference proceedings and compliance with third-party license agreements - The company's ability to commercialize its products depends on obtaining and enforcing patent protection for its gene editing technology, which is uncertain and complex276277 - The company is subject to the outcomes of ongoing patent interference proceedings involving its licensors (the Boston Licensing Parties) and other entities like CVC and Toolgen, which could result in the loss of key patent rights for CRISPR-Cas9 technology295296297 - The company relies on licenses from third parties like Beam and Harvard/Broad. Failure to comply with the terms of these licenses could result in losing rights to essential technology for its product candidates286287 Risks related to commercialization Approved products face significant commercialization hurdles including market acceptance, competition from established treatments, and securing favorable pricing and reimbursement - Approved products may fail to gain market acceptance from physicians, patients, and payors due to competition from established treatments and the novel nature of gene editing357358 - The company faces substantial competition from major pharmaceutical companies with existing products for lowering LDL-C, including mAbs (Repatha®, PRALUENT®) and siRNA (Leqvio®), as well as other gene editing programs in development362363 - The company has no sales, marketing, or distribution infrastructure and will need to build these capabilities or rely on third parties, which carries its own risks370 - Successfully commercializing products depends on obtaining adequate coverage and reimbursement from government and private payors, which is uncertain and subject to cost-containment pressures377378 Risks related to regulatory approval and other legal compliance matters The company faces risks from an uncertain and evolving regulatory landscape for gene editing, ongoing compliance with healthcare and data privacy laws, and potential impacts from new legislation - The regulatory landscape for gene editing is novel and uncertain, which could lead to unpredictable timelines, costs, and requirements for obtaining marketing approval388 - Even if approved, products will be subject to continual and extensive regulatory oversight, and any failure to comply could result in restrictions, withdrawal from the market, or penalties416418 - The business is subject to numerous healthcare laws, including anti-kickback and false claims statutes, as well as global data privacy laws like GDPR and HIPAA, violations of which can lead to severe penalties424425441 - Recent legislation, such as the Inflation Reduction Act (IRA), could impact pharmaceutical pricing and reimbursement, potentially affecting the profitability of future products435436 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities and has not used any of the $281.6 million net proceeds from its June 2021 IPO - There were no unregistered sales of equity securities in the reported period507 - As of March 31, 2023, the company had not used any of the $281.6 million in net proceeds from its June 2021 IPO. The funds are invested in money market funds and marketable securities509 Exhibits This section lists the exhibits filed with the Form 10-Q, including corporate documents and officer certifications